Will the Flaherty-Harper Ticking Time Bomb be Detonated?

In Jim Flaherty's first budget, he announced that his government was opening up the housing market to  private insurers.  “These changes will result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home ownership."

Loosely translated, the sub-prime mortgage industry was heading north, and so was AIG.

On May 2, 2006, in his first budget, Mr. Flaherty announced that not only would Ottawa guarantee the business of U.S. insurers, it was doubling the guarantee to $200-billion.

And despite repeated warnings that Canada's financial system was being exposed to far too much risk, Flaherty locked arms with his boss and said "bring it on".

Tick, tick, tick.

If you remember, AIG was one of the early victims of the Wall Street induced economic crisis, and in fact their "innovation" helped to create the collapse, when with the help of Goldman Sachs, they backed too many risky mortgages.

Of course that was the game all along as what are known as "derivatives" became a popular form of investing.  The way it works is that people who wouldn't normally qualify for a mortgage, suddenly became home owners.  This brought more competition into the housing market creating a bubble. 

The investor then took out an insurance policy on the risky mortgages, knowing that they would fail, and when the housing bubble collapsed, they cashed in and AIG cashed out.  Matt Tabbi called it the "swoop and squat".

Yet again, knowing how risky derivatives are to a nation's economy, Jim Flaherty hired a Goldman Sachs employee to help him get the Canadian taxpayer into the game, even investing some of our Canada Pension Plan funds.

Tick, tick, tick.

When the economic crisis hit, Flaherty knew he was in trouble.  The banks after repeated warnings, let him know that they were not going to shoulder the burden of his mismanagement, so he was forced to buy back all the high-risk debt that he had saddled them with.

Unlike the bank bailouts south of the border, where the banks had to pay the government back, this was an outright transfer of rotten paper, in exchange for $125 billion in cold hard cash.  Our cash, now backed by what could very well be worthless junk.  And since we didn't actually have $125 billion sitting around in a safe, we had to borrow the money, adding to our national debt.

Tick, tick, tick.

The International Monetary Fund is now warning that Canada could be facing the collapse of our housing bubble, something that the government was warned about two years ago.

Canada’s average home price is about 10 per cent higher than models suggest it should be, posing a “vulnerability” to the country’s economic outlook, the International Monetary Fund warns in a new report.  A drop in prices would be a blow to already highly indebted consumers. With household debt at record levels of about 150 per cent of disposable income, the domestic spending boom that helped Canada weather the financial crisis already is at its limits.

When Flaherty bailed out our banks, he said that it was to "free up funds", that could be lent to consumers so that they would spend, and help keep up the illusion of his sound fiscal management.  Now Goldman Sach's Mark Carney, head of the Bank of Canada, is blaming consumers for their personal debt, the result of spending that they no doubt would have curbed, had they known just how shaky our economy really was.

Tick, tick .... TOCK?!

The IMF is now investigating CMHC.  Where were they in 2006?

Even Canadian Bankers are Hoping that the "Occupy" Movement is a Success

The Organization for Economic Co-operation and Development (OECD) released a report yesterday, showing that Canada's income disparity is growing faster even than that of the U.S.  Low paying jobs and a diminishing middle class, are partly to blame, but also deregulation, that allowed the wealthy to become even wealthier, is a huge factor.

Jim Flaherty was on the defensive in the House yesterday, suggesting that his government has been creating good jobs, but all they created was a marketing strategy:  The Economic Action Plan.  They had no real economic plan, other than to move lobbyists and Goldman Sachs into their offices on Parliament Hill.

Do we really expect that lobbyists have our best interests at heart?  Or Goldman Sachs?

Do you know what Goldman Sachs employee Mark Carney did before being named to head up up the Bank of Canada?  He advised Russian oligarchs during the period of mass privatization, after the collapse of the Soviet Union.

According to Wikipedia:

During the 1990s, once Boris Yeltsin took office, the oligarchs emerged as well-connected entrepreneurs who started from nearly nothing and got rich through participation in the market via connections to the corrupt, but democratically elected, government of Russia during the state's transition to a market-based economy.  The oligarchs became extremely unpopular with the Russian public, and are commonly thought to be the cause of much of the turmoil that plagued the country following the collapse of the Soviet Union.  The Guardian described the oligarchs as "about as popular with your average Russian as a man idly burning bundles of £50s outside an orphanage".

Historian Daniel W. Michaels suggests that the Russian people were better off under Communism, as the word "corrupt" has replaced "authoritarian".  You would think that capitalists would want to make their system more palpable, in order for it to survive, but instead they have only exposed the ugliness.

Bankers on the side of the "Occupy" Movement?

In October, TD Bank CEO Ed Clark, spoke of the imminent threat to Canada's economy, citing several root causes. 

Consumer and employer confidence, demographic forces that are causing demands for government services to grow faster than revenues, and globalization that has produced massive increases in income around the world, but its benefits have been unevenly distributed.

Clark's speech combines the economic with the social, something that is missed under neoconservatism.  As Margaret Thatcher once said, "There is no such thing as society".  Neocons believe that if you allow the rich to get richer, the benefits will "trickle down", but that isn't happening.  It didn't work for George Bush and it won't work for Stephen Harper.

However, Clark presents another cause of our economic woes:  "divisive politics", and he urged business leaders and politicians to "stand against divisiveness and political extremes."

Even with a majority, Harper continues to play political games instead of focusing on the needs of Canadians, and engages in Nixonian politics, instead of governing.

During the 2006 election campaign the media asked Paul Martin how much he thinks about strategy.  He replied "seldom".  They asked Stephen Harper the same question, and he replied "24/7".  Nixon's response to the same question was 6 days out of 7, and that was after he won the election.  It's politics all the time, and the constant game playing is hurting everyone.

At a time when all elected officials should be putting their heads together to sort out this mess, the Conservatives prefer to go it alone, suggesting that only they can save us.

Only they can bail out our banks and then lie about it.

Only they can spend $18 million more on gazebos for Tony Clement's riding, than infrastructure in Attawapiskat.

Only they can expand our prisons when Canada's crime rate is the lowest in history.

Only they can buy planes without engines and contemplate the purchase of nuclear submarines, while Canadian citizens are suffering.

Only they can bloat their cabinet and enlarge their executive with Parliamentary secretaries, meaning fewer elected MPs working for anyone other than the Conservative Party of Canada.

Ed Clark also offers some advise to the Occupy movement:

Asked by the Toronto Star what he would tell the protesters, he said: "My main advice is stick to your guns. When people say, 'You don’t have a solution,' say, 'Of course we don't. If there was a solution, don't you think people would be doing it?' To ask the people who occupy Wall Street or Bay Street to have a full answer is absurd. They're doing their job which is to say, 'If you think this [system] is working for everyone, it's not.'"

Globalization isn't working. Neoconservatism isn't working. Partisan politics are not working. 

This government is failing us so we need to build on this "Occupy" movement.  We need more government revenue, not less, but instead of hitting workers, as Flaherty has done, we must go after corporations and our wealthiest citizens, demanding that they start paying their share.

We've propped them up long enough.

It's Not About Occupying Wall Street But How Best to "Occupy" Ourselves

In the 1960s, college and university campuses, known for their apathy, began to erupt into political activism. Rosa Parks, the black woman who refused to move to the back of the bus, inspired many to stand up, or perhaps more appropriately, "sit-in", for racial equality. Her actions had sparked the Montgomery Bus Boycott, and a young preacher, Martin Luther King Jr., who led the boycott, wrote a book: Stride Toward Freedom.

Motivated by King's words, on February 1st, 1960;  four black students from North Carolina Agricultural and Technical School, David Richmond, Franklin McCain, Ezell Blair, and Joseph McNeil, sat down at a "whites-only" Woolworth's lunch counter and ordered coffee. Following store policy, the lunch counter staff refused to serve them.

The next day, 27 young people appeared at that lunch counter to protest the store's actions, and engaged in a "sit-in". The third day there were 60, and the fourth, more than 300.

Their actions ignited a wave of student sit-ins, and despite beatings, arrests and the sting of fire hoses, the protests continued to grow, in much the same way that the Occupy Wall Street protests are growing today.

Many who marched for equality then, were from the privileged white class, but knew that segregation was fundamentally wrong.  Many Occupy Wall Street protesters have jobs.  Others are retired and don't need jobs.  They just understand that 1% of the citizens should not control all the wealth, and more importantly, that governments should not be catering to that top 1%.

As Bill Maher said this week, they do not oppose capitalism, but only those who have abused it.

I read a column on a U.S. site, critical of people like Susan Sarandon and Kanye West, lending support to the occupiers.  After all, they are hardly one of the 99%.  But having money does not mean that you can't empathize.

To the movement, 'Wall Street' is not a noun.  It is an adjective to greed and injustice.

The actions taken on that bus in Montgomery or that lunch counter at Woolworths, did not single handedly change the world, but were the catalyst for much needed change, that has greatly influenced how we feel today.

When it was learned that Republican presidential hopeful, Rick Perry, had a ranch named "niggerhead", the public reacted with shock.  Fifty years ago they would not have batted an eye.

Since the 1960s, the right-wing has tried to push back the Civil Rights Movement, in the same way that they are trying to discredit this one.  They have failed.  Their money has bought power, making it easy for someone like Stephen Harper to enjoy it, but they have not been able to change our core values.

In 2009, Conservative insider Tom Flanagan, wrote a follow-up to his 1995 Waiting for the Wave -- WFW: The Reform Party and the Conservative Movement.  I thought there might be some revelations, but it still has just enough fact to make the non-fiction category, but barely.  This must be what he meant when he said that something "doesn't have to be true, just plausible".  I'll call this book convoluted plausibility, and leave it at that.

However, I took exception to his list of Reform Party accomplishments, aside from the way they connived themselves to political victory.  Flanagan suggests that Reform's legacy is that politicians now talk about "families", saying that (the late) Jack Layton was just as likely to propose policies to help hard-working families, as Stephen Harper. (p. 215)

Would that be the same Stephen Harper who boasted that one of his National Citizens Coalition accomplishments, was killing the baby bonus?  It wasn't scrapped of course, but adjusted based on family income.  And let's not forget this one:  "Universality has been severely reduced: it is virtually dead as a concept in most areas of public policy... These achievements are due in part to the Reform Party..."  - (Stephen Harper, speech to the Colin Brown Memorial Dinner, National Citizens Coalition, 1994.)

What Reform attempted to do was redefine what constitutes a family, by marginalizing any who don't fit their mould of stay at home mother, working dad, conforming children.

Before Harper was born, politicians put families on the agenda.  It was called The Welfare State, and it has served us well.

Jim Flaherty and Mark Carney, now claim to understand why the Occupy Wall Street protesters are angry.  Flaherty says:  “Income distribution is important and there is a concern that a very, very small group of people have very large incomes and that others do not have those same opportunities.”  He fails to mention that his policies have helped to create that gap.

If he was sincere, he would vow to roll back corporate taxcuts and refuse to continue with the Mike Harris/George Bush "red tape commission", that will remove all safety and environmental standards that impede the top 1% from getting richer, while putting the bottom 99% at risk.

A perfect example of this is with Maple Leaf Foods.  The Harper government began allowing food processing plants to inspect themselves, resulting in the death of 20 Canadian citizens, who didn't get the memo.

Yet now those "job creators", who have not only benefited from deregulation, but have also enjoyed enormous tax breaks, are going to layoff 1550 workers.

The whole neoconservative agenda is a crock.  Just ask Rick Salutin.

The Occupy Wall Street movement has the potential to change how we view financial inequality, in the same way that the Civil Rights Movement changed how we viewed racial inequality, and the Womens Movement, gender inequality. 

In Kingston, Ontario;  there is a small group of protesters, camped out in a city park.  They are breaking bylaws, but our mayor has promised not to move them, because their message is too important.  Local citizens come by on a regular basis, with food and messages of support.

It is quiet, non-violent, civil disobediance.

We can no longer rely on politicians to do what is right.  We are the ones who must draft policy and set the agenda.  It only takes a few, and then a few more, and a few more, and a few more ................

Swindlers Revisited: Why Canada's Occupy Wall (Bay) Steet Movement is Important

A friend left a comment on my blog yesterday, reminding me of a book I had read several months ago, Swindlers.  She was just in the process of reading it herself.  Timely, given the current protests against Wall Street greed.

Anyone questioning why citizens have taken to the streets, need to read this book.

In it, the Rosens (father and son), tell us of how Jim Flaherty and Stephen Harper have signed Canada on to a new set of rules governing corporations.

Thanks to our self-regulated auditors, Canada will soon adopt [Came into effect on January 1, 2011]  new accounting and auditing standards called International Financial Reporting Standards (IFRS). Under IFRS, corporate managers will have even more freedom to distort and manipulate their financial reports to make themselves look better than they really are. Despite the devastating impact it will have on investors and the utility of financial statements in general, auditors succeeded in pushing through the change because of complete disinterest from lawmakers and a lack of recognition by investors that auditors have no interest in upholding their needs. Canadians simply assume that a self-regulatory body like the auditors would look after public interests, not just their self-interests. (Swindlers: Cons and Cheats and How to Protect Your Investments From Them, By Al Rosen and Mark Rosen, Madison Commerce, 2010, ISBN: 978-1-897330-76-0)

They are now legally allowed to lie on their financial statements to lure potential investors.  When I wrote of this before, I received an email asking why it mattered.  After all, it was just rich people cheating other rich people.

However, this affects all of us, because it could mean company pension plans, RRSPs, mutual funds ... things we don't think about every day but they could have a serious affect on our future financial well being.  More from the book:

Judging from the stories that run in the newspaper, you probably think that Canada is a pretty safe place to invest your money. After all, we just survived one of the worst economic downturns since the Great Depression. Some of the biggest names in the world of banking and finance have disappeared, but not a single Canadian bank collapsed. Canada must be doing something right, right?

If you believe that, we have some bad news. The risks you take by investing in Canada have never been greater. And the so-called protection that Canadians think they receive from regulators, lawmakers, and auditors has never been weaker. (ibid)

Good PR (propaganda) at taxpayers expense, has led us to believe that we are financially sound.  We're not.  Since coming to office, the "Harper government" has been on a deregulation drunk.

During one binge, they flooded the market with sub-prime mortgages and the next day found themselves in bed with AIG.  Some morning after.

Another weekend of partying and they bailed out our banks to the tune of $125 billion.  The drunkenomic hangover.

More from the Rosens:

Corporate lobbying power and the absence of an organized investor voice in Canada means that most regulatory actions favour corporate interests. Canada is the only major country in the world that allows the same people who audit public companies to financially control the process that sets the auditing rules. This basic and fundamental conflict of interest means that auditors can set rules that cater to their paying corporate clients over the needs of investors.

There's a lot of money involved in these financial cons. Based on our extensive experience with auditor negligence and executive dishonesty, we estimate that investors have lost hundreds of billions of dollars to scams in Canadian financial markets. Even if you haven't invested a penny in the stock market yourself, these losses affect you. Anyone who collects a pension, saves for his children's education, or simply pays her taxes like an honest citizen suffers from the disinterest of our regulators and lawmakers in prosecuting dishonest corporate executives, aided by acquiescent auditors.

If power is intoxicating, unchecked power is inebriating. 

A few more brown-bagged calamities:

A former Goldman-Sachs employee is running the bank of Canada and has brought along a colleague to act as his assistant.  The same Goldman-Sachs who helped to create the last economic crisis, and the same Goldman-Sachs who warned their clients not to invest in Canada.

Another Goldman-Sachs employee has been signed on to handle Canada's foray into derivatives.  Investor Warren buffet calls derivatives "weapons of mass destruction", but that won't stop Flaherty.  He's even putting some of our Canada pension funds into this risky venture.

Stephen Harper's chief of staff came right off Bay Street to secure the purchase of the F-35s for one of his clients.

And yet Flaherty claims that Canadians have little to protest.

Chantel Hebert is suggesting that instead of protesting Canadians should vote.  Maybe if the media kept us better informed, we would.  Every time they refer to this government as "Tories", they are putting another nail in our coffin.

A Queens University political science professor was asked recently why people are protesting.  She said that the question should not be "why?" but what took them so long.

Will Canadians Finally Rise Up Against the Evils of Neoconservatism?

I mentioned the musician Tom Morello, who had appeared on Bill Maher recently, discussing social issues.  I was so impressed with his genuine concern for societal imbalance and dedication to several causes.

Morello spoke of the "occupation of Wall Street" by folks who had just had enough.  One member of the panel belittled the protesters, claiming there were only a handful, but clearly there are more than he would have liked us to believe.

In fact, at least 800 were arrested, and the numbers are rising, not only of arrests but of demonstrators.

The group, called Occupy Wall Street, has been protesting against the finance industry and other issues by camping out in Zuccotti park in New York.  During the afternoon a long line of protesters numbering several thousand snaked through the streets towards the landmark bridge across the East River with the aim of ending at a Brooklyn park.

However, during the march across the bridge groups of protesters sat down or strayed into the road from the pedestrian pathway. They were then arrested in large numbers, and held for several hours, by officers who were part of a heavy police presence shepherding the march along its path.  At one stage 500 protesters were blocked off by police on the bridge. At least one journalist, freelancer Natasha Lennard for the New York Times, was among those arrested.

The protesters then took their march to police headquarters.

Erin Larkins, a Columbia University graduate student who says she and her boyfriend have significant student loan debt, was among the thousands of protesters on the bridge. She said a friend persuaded her to join the march and she's glad she did.  "I don't think we're asking for much, just to wake up every morning not worrying whether we can pay the rent, or whether our next meal will be rice and beans again".

400 of America's wealthiest citizens, have more money than the bottom 155 million combined.  Yet when Wall Street gambled and lost, they were bailed out, while thousands at the bottom were thrown out.

Thrown out of their jobs, out their homes and out of the government's concern.

I'm pleased to learn that a similar protest is planned for Canada.

Inspired by protesters along Wall Street and in other U.S. cities, hundreds are expected to occupy Toronto's Bay Street in two weeks to air their various grievances against the financial system and its wealthiest companies.  The protest near Wall Street in New York is entering its third week, and doesn't appear to be slowing down. In fact, a police crackdown has only emboldened protesters and some are now expecting the "occupation" to continue into the winter.

The organizers of Occupy Toronto plan to descend on King and Bay Streets on the morning of Saturday, Oct. 15 to set a base of operation to prepare for a march on that Monday. Organizers hope the occupation will last into the following week.

It's all we have now. 

Michael Moore was also a guest on the program and his discussion with Morello turned toward citizen activism.  They agreed that it would just take one person.  One "last" person.

The last person to be thrown out of their home.  The last person to lose their job to outsourcing or downsizing.  The last person to be refused medical treatment because their insurance didn't cover it.

Rosa Parks was the last person, symbolically speaking, to move to the back of the bus, simply because she was black, and she sparked the Civil Rights movement.

In Canada, wonderful little Brigette Depape, stood alone against Stephen Harper and the Senate.  She took a beating from the media and a dressing down from Senator David Tkachuk, one of the sorriest excuses for a human being who ever lived.
 
Yet Tkachuk prevailed.  We chose corrupt not courageous.
 
In July Kai Nagata quit his job as CTV's Quebec City Bureau Chief, over the state of the Canadian media, and their refusal to sound the alarm over the Harper Doctrine, a rehash of the Bush Doctrine.

But the media is still spinning themselves silly, afraid to stop, fearing they might land on a real political news story.  There are exceptions, but sadly, too few.

So if you're tired of corporate tax breaks, deregulation that threatens our environment, and the constant pandering to the rich, join the protest on October 15.

For heaven sake, a former Goldman-Sachs employee is now running the Bank of Canada.  Jim Flaherty and Stephen Harper have signed us on to new accounting rules that allow corporations to lie and cheat, without penalty, while toughening laws against far weaker, and less damaging, criminal acts.

When are we going to say enough is enough?  Who will be our "last"?

JP Morgan Fined $153.6M For Doing God's Work

It is becoming increasingly evident that the so-called "Economic Crisis" was carefully engineered to force governments to tear down their welfare states.

The 153.6 million fine for JP Morgan is a drop in the bucket, when we look at the billions of dollars given in bailout money, much of which went to pay bonuses to execs of those companies, who "needed" the cash to "survive".

Too big to fail we were told.

The neoconservative movement is based on many things, but at the root is the desire to place public funds into private hands, and boy has there been a lot of public funds given away since this began. The financial 'shock doctrine'.

As a result, the United States is almost bankrupt and around the world austerity budgets are causing undue suffering on citizens. Not wealthy citizens though.

They're serving up caviar and Foie gras, while watching the peasants revolt on their wide screen TVs. Nothing this entertaining since public hangings.

But a few have a conscience, as distorted as it is, holding onto the belief that they are doing God's work". God sent Katrina so the neocons could rebuild in their image of what a "free market" should look like, including private schools and voucher systems. Milton Friedman had a spiritual awakening and began speaking in tongues.

Lloyd Blankfein, CEO of Goldman-Sachs, told the London Times that he was just a banker doing God's work. I'm glad he cleared that up, because I thought he was just another crook.

And speaking of crooks, this "economic crisis" certainly did a lot for the careers of Jim Flaherty and Stephen Harper. They just have to mention the word "economy" and everyone swoons.

And they're still using it as an excuse for more taxpayer funded advertising and even the reason for attacking postal employees. How dare they demand fair treatment during our "economic recovery"?

A Wikileaks document revealed that the Americans believe, and rightfully so, that Stephen Harper has no idea what he's doing when it comes to the economy, only hoping that the stimulus package worked. Otherwise, he had no plan "B".

They also portray Harper as being weak and a blowhard. Like we needed Wikileaks to tell us that.

Let's hope there are more fines and eventually arrests, because these guys should never get away with they've done. The largest fraud in history, that has destroyed the economies of many nations, and stuck Canada with a Harper majority.

He now has four years to destroy us, and destroy us he will.

Please Take Part in This Important Telethon to End the Suffering

There is a devastating situation in Canada that has earned little respect from our media, and yet an entire sector of our population is suffering. We as concerned citizens, must reach deep in our hearts and our pocketbooks to end this.

Unless we can raise $100,000,000,000 by midnight tonight, I'm afraid the entire corporate welfare state will collapse.

Yes folks. I hope you're sitting down. Bank executives are having to ... I'm having trouble even finding the words ... TAKE A CUT IN PAY!

National Bank of Canada chief executive officer Louis Vachon saw his pay in 2010 slip from 2009 as the bank fell short of its earnings target, the bank said Thursday. According to the bank's management proxy circular, Mr. Vachon took home a total of about $5.2-million last year, compared with $5.6-million in 2009.

That's a cut of $400,000. How will he manage? Maybe I could send him Mike Harris's old menu that he provided to those who saw their welfare benefits cut by 42%. Mostly beans and tuna, but at least Louis will be getting his protein. Poor man will have to keep his strength up for the troubling times ahead.

We could send him the senate report on poverty, but Stephen Harper threw it in the trash.

So tune in to our 'Save the Bankers Telethon' and give us your pledges. And please be generous. For a contribution of $1 million or more, you will receive the collectors edition of Goldamn Sachs financial records and a copy of Jim Flaherty's latest book, 'How to Screw the Canadian Taxpayer Without Them Even Knowing It'

Just call 1-8-GREEDYBUMS

(This message brought to you by The Conservative Party of Canada)

Jim Flaherty, Golman Sachs and a "Pig in a Poke"

This is the next in my series on Jim Flaherty, Goldman Sachs, AIG and Canada's massive bank bailout. Those following the story already knew of the $125 billion from Canadian taxpayers, but for the first time we heard of how our big five banks also received bailout money from the U.S. Treasury, apaprently in the amount of $111 billion.

But unfortunately the story that appeared in the Globe and Mail vanished almost as soon as it was posted. The only other person who had seen this illusive column was Mark McQueen: Fed's Remarkable Disclosure of Funds for Canada’s Five Largest Banks. His link to the story is also broken.

So I decided to do a bit of digging on my own, and it is indeed true. You just have to let your fingers travel the globe and pick up scraps where you can, so bear with me.

On May 13, 2010, American journalist John Lott reported: Guess What, America, You're Bailing Out Banks All Over the World!

To say that Americans weren't thrilled by the original government bailout of American financial institutions is an understatement. But if they were upset with that plan, imagine how furious they’re going to be when they start to understand that the Obama administration has begun bailing out banks from Japan, Canada and Europe.

.... With the exception of $30 billion to Canadian banks, the Federal Reserve won't reveal how much of these subsidized loans they are giving to foreign banks. And why we would want to subsidize Canadian banks is a mystery in the first place. Compared to the U.S. economy, the Canadian economy has done fairly well during the global economic crisis.

In September of 2008, the U.S. government was already contemplating bailing out foreign banks who had dealing in the U.S., lifting many requirements, and this was being handled by Henry Paulson.

Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."

And who is Henry Paulson? The former Chairman and Chief Executive Officer of Goldman Sachs. He loosened the criteria for bailouts to include anyone who had dealings with AIG. And as we know, that included Canadian banks courtesy of Steve and Jimbo.

The Financial Post reported in March of 2009 that the Bank of Montreal scored big on the deal.

Bank of Montreal has emerged as one of the key beneficiaries of the costly decision by the U.S. government to rescue American International Group. Canada’s fourth-largest bank is among the top 10 recipients of federal bailout money paid to financial counterparties by the stricken insurer, according to documents published by AIG.

The payments were revealed after pressure from Capitol Hill for an account of how taxpayer money had been spent by the company amid a rising populist backlash. The documents show a least US$1.1-billion of bailout money was funneled to BMO alongside payouts of up to US$13-billion each to U.S. and European banks.

So while they were given $125 billion tax dollars so that we could buy back their toxic paper, they also put out their other hand and took from American taxpayers. And while they were losing their homes and their livelihoods, our so-called "good banks" were feeding from the public trough on both sides of the border.

CNN were also reporting on our "good banks" and the difficulty in getting information South of the border. BMO appears on the list. And with some of the money they bought up AIG in Canada. As a result they were investigated by the NY Attorney general's office.

Bank of Montreal is being caught up in a widening probe into the use of bailout funds by American International Group, the distressed U.S. insurer. Payments made by AIG to Canada’s fourth-largest bank are due to be examined by the New York Attorney-General Andrew Cuomo as part of an inquiry into billions in taxpayer money funnelled to financial institutions.

The investigation comes as the attention of U.S. lawmakers turns to the payouts to banks following a political firestorm over bonuses handed by the insurer to staff at a controversial unit that sold credit protection to sophisticated financial clients. "Our investigation into corporate bonuses has led us to an investigation of the credit default swap contracts at AIG," the Attorney-General’s office said. BMO declined to comment.

And according to Insurance News Net:

Reports name AIG's derivative counterparties, including BMO NEW YORK _ The U.S. government bailout of insurance giant American International Group Inc. has benefited at least two-dozen U.S. and foreign financial institutions _ including the Bank of Montreal _ who together collected some $50 billion, news reports said Saturday.

BMO was also a partner in their derivatives game, that brought on the global economic crisis.

So Goldman Sach's Henry Paulson was in charge of distributing funds to banks and is trying to keep quiet how much went to foreign interests, including Canada's big five. Goldman Sach's Mark Carney is now the Governor of the Bank of Canada. Goldman Sach's Timothy Hodgson is his assistant in charge of derivatives, and Flaherty is allowing our CPP funds to be invested in this high-risk gamble.

Our Pig in the Poke

Matt Taibbi in his piece Wall Street's Bailout Hustle, refers to one aspect of the entire scam as a "Pig in the Poke".

The scam's name comes from the Middle Ages, when some fool would be sold a bound and gagged pig that he would see being put into a bag; he'd miss the switch, then get home and find a tied-up cat in there instead. Hence the expression "Don't let the cat out of the bag."The "Pig in the Poke" scam is another key to the entire bailout era. After the crash of the housing bubble — the largest asset bubble in history — the economy was suddenly flooded with securities backed by failing or near-failing home loans. In the cleanup phase after that bubble burst, the whole game was to get taxpayers, clients and shareholders to buy these worthless cats, but at pig prices.

One of the first times we saw the scam appear was in September 2008, right around the time that AIG was imploding. That was when the Fed changed some of its collateral rules, meaning banks that could once borrow only against sound collateral, like Treasury bills or AAA-rated corporate bonds, could now borrow against pretty much anything — including some of the mortgage-backed sewage that got us into this mess in the first place. In other words, banks that once had to show a real pig to borrow from the Fed could now show up with a cat and get pig money. "All of a sudden, banks were allowed to post absolute shit to the Fed's balance sheet," says the manager of the prominent hedge fund.

At about this time, we were in the middle of an election campaign in Canada, and when Stephane Dione sounded the alarm, both Jim Flaherty and Mark Carney laughed and referred to him as "Chicken Little". And yet not long after Flaherty announced his first 25 billion bank bailout, when he started buying their toxic assets on behalf of the Canadian taxpayer.

He tried to say it was not a bailout, but what did the Canadian tax payer get for this investment? The cat in the bag. Our "good banks" played fast and loose with the requirements for loans and mortgages, absorbing none of the risks.

When it all came tumbling down, what did they do? They used their bailout money to buy up defunct U.S. banks, and deregulated our industry to meet the lower U.S. standards, meaning that if there is another meltdown, Canada will not do so well.

And according to Market Watch, that could take place as early as Christmas of 2011.

Yet the Conservatives are using our money to convince us that they are the best to handle the "economy". Our "pig in the poke". We think that somewhere we have money and sound investments, but in fact we have nothing but a boatload of debt and no regulations to protect us from unscrupulous Wall Street. Instead they've been moved in.

Previous:

1. It's Time to Have a Serious Conversation About Jim Flaherty and Goldman Sachs

2. Jim Flaherty, Goldman Sachs and the Foxes in the Henhouse

3. Jim Flaherty, Goldman Sachs and "The Swoop and Squat"

4. Jim Flaherty, Goldman Sachs and AIG Comes Calling

5. Jim Flaherty and Goldman Sachs: The "Cooling Off" period

Jim Flaherty and Goldman Sachs Capers on Film, Part IV

Jim Flaherty and Goldman Sachs: The "Cooling Off" period

This is the next in my series on Jim Flaherty's Canadian financial crisis, and how we got there. Since it's not registering that Canada had a massive bank bailout and we are now the proud owners of $125 billion worth of rotten paper, I went back to the beginning, so you can see how we got here from there.

Stephen Harper has always supported bank deregulation and often chided the Liberal government for being too cautious. It's a good thing they were. As Trish Hennessey says in her piece: The Quiet Erosion of Canada’s Regulation System

Canada’s economy was shel­tered from the worst of the 2008 global economic meltdown because our bank regulations are tougher than they are in competing jurisdictions like the U.S. Fol­lowing our own high standards paid off, and protected Canadians from the eco­nomic devastation that brought entire nations such as Iceland and the U.S. to the brink of ruin.

Yet our federal government continues to quietly deregulate Canada. Our own Prime Minister, Stephen Harper, is warn­ing against strong regulatory practices. In a speech to the G20 in January 20102, Harper warned other nations against ‘ex­cessive’ financial regulations — a coun­terintuitive message, given strong regulations saved Canadians from the economic devastation our American counterparts are experiencing today.

Given that deregulation in the United States paved the way for Goldman Sachs to almost destroy the global economy, we might want to ask why our finance minister has made a Goldman Sachs employee, the Governor of the Bank of Canada, who has become a cheerleader for Harper's policies.

And he's brought along another Goldman Sachs employee to act as an advisor. We simply aren't tearing down our safety net fast enough. And this new Goldman Sachs employee, Timothy Hodgson, will be handling derivatives, like the ones that help to bring on the economic crisis?

Matt Taibbi wrote for the Rolling Stone, a piece called, Wall Street's Bailout Hustle, as he reveals the con game played by Wall Street and Goldman Sachs. He calls the current period the "Cool off", which in the grifter world is the calming down period. Get your mark to trust you again.

But given that Wall Street, bailed out by the taxpayer, is again engaging in reckless behaviour, he believes that we are heading toward another meltdown.

The bottom line is that banks like Goldman have learned absolutely nothing from the global economic meltdown. In fact, they're back conniving and playing speculative long shots in force — only this time with the full financial support of the U.S. government. In the process, they're rapidly re-creating the conditions for another crash, with the same actors once again playing the same crazy games of financial chicken with the same toxic assets as before. (2)

Only this time Canada's safety net is full of big gaping holes and Wall Street has paved it's way to Parliament Hill.

Stephen Harper, Jim Flaherty and Their Cooling Off Period

The first "cool off" for Steve and Jim came in the fall of 2008, when they announced with much fanfare that they were closing the door on 40-year, no down payment mortgages. What they didn't mention was that the only reason Canada had mortgages like that was because Steve and Jim allowed AIG, Goldman Sachs and other American gamblers to bring them to Canada.

But economists and bankers were sounding the alarm, sending letter after letter to the federal finance department, asking them to quit. But it was only after news began spreading over the sub-prime meltdown south of the border, that these two decided they'd better cool it for a bit.

AIG didn't lose a dime, because Flaherty had already put up $200 billion Canadian tax dollars to make sure they didn't. But CMHC cried foul, our banks just cried, and Jimbo came to the rescue, buying the junk back so they could get them off the books before the mainstream media caught on. Too late though.

The cat was out of the bag.

So Steve and Jim went public, with "we're going to put a stop to this" and most in the media hailed them as heroes. Kinda like a bank robbery when one criminal helps to apprehend the others but still manages to make off with the dough.

And when they bought this junk back they tried to say it wasn't a "bank bailout", but that was, well ... a lie:

Harper called the recent CMHC deal "simply a market intervention ... to ensure our credit markets are functioning strongly." But Grinspun [York University political economist Ricardo] dismisses that interpretation: "Taxpayers are assuming risky assets and giving away safe ones." The problem, says Grinspun, is Harper and Flaherty haven't addressed the issues that exacerbated the crisis, including lack of transparency, greater deregulation and a philosophy the markets know best. (3)

A few people made a lot of money off our mini housing boom, and the only ones left with nothing but garbage, were the Canadian taxpayers. And can we withstand another meltdown with this toxic debt still on our books?

The new "cool off" of calming down the marks (us) is being helped along with millions of tax dollars going to sell us on the myth that this government piloted us through the recession. Unfortunately the ship is the Titanic and the iceberg may be just up ahead.

Previous:

1. It's Time to Have a Serious Conversation About Jim Flaherty and Goldman Sachs

2. Jim Flaherty, Goldman Sachs and the Foxes in the Henhouse

3. Jim Flaherty, Goldman Sachs and "The Swoop and Squat"

4. Jim Flaherty, Goldman Sachs and AIG Comes Calling

Sources:

1. Disaster in the Making: The Quiet Erosion of Canada’s Regulation System, By Trish Hennessy, Canadian Centre for Policy Alternatives, February 22, 2011

2. Wall Street's Bailout Hustle, By Matt Taibbi, Rolling Stone, February 17, 2010

3. Deficit not 'dirty' word experts warn Tories, By Linda Liebel, Toronto Star, October 27, 2008

Shouldn't Tough on Crime Measures Include Being Tough on Corporate Crime?

The Conservative government is determined to forge ahead with their tough on crime agenda at a time when citizen crime is at it's lowest in our history.

As Edward Greenspan and Anthony Doob write in the Globe:

Everyone wants to reduce crime and use resources effectively. But the Conservative government’s “tough on crime” agenda would have you believe that crime is increasing and can only be reduced by using tougher penalties. This assertion is wrong, as is a study by an Ottawa-based think tank that reviewed the 2009 Statistics Canada report on crime.

Harper insider Scott Newark and the bogus MacDonald-Laurier think tank tried to suggest otherwise, but we're not buying it.

However, crime rates in another sector of the population is definitely on the rise. Corporate crime is the highest it's been in my memory, and yet instead of cracking down on it, the Harper government has put measures in place to make it easier for corporations to defraud the average taxpayer.

The new accounting laws that allow corporations to fudge their income statements, is not just about defrauding the wealthy, but also investments on our behalf through company pension funds and even CPP.

In his book Corporateering, Jamie Court asks why there are not "three strikes" laws and even the death penalty for big business when they commit criminal acts. Goldman Sachs and other Wall Street players spent no time in jail for creating the worst economic crisis since the Great Depression.

Three strikes should apply to corporations, too. If a person can get jail for life for three criminal convictions, why shouldn't corporations face a similar standard? A corporate death penalty for any corporation convicted of three separate criminal offenses would set a new bar corporate responsibility and deter the corporate crime waves of tomorrow ... The first strike requires a full-page advertisement be taken out in major newspapers; the second necessitates a fine to the state treasury; the third results in the loss of the right to do business. Laws could be enacted at the state and federal level revoking the charter of any corporation that proved through its conduct that it was beyond rehabilitation. Trusteeships to take over of laid-off workers could be created. Mostly, however, such laws provide a deterrent to wrongdoing. (1)

Is that why all the hoopla about being tough on crime? They want to hide the fact that the corporate sector is being given a free pass? Something to think about.

Source:

1. Corporateering: How Corporate Power Steals Your Personal Freedom and What You Can do About it, by: Jamie Court, Penguin Books, 2003, ISBN: 1-58542-228-2, Pg. 256

Jim Flaherty and Goldman Sachs on Film: Part III

Jim Flaherty, Goldman Sachs and AIG Comes Calling

This is the 4th in my series on the relationship between Jim Flaherty and Goldman Sachs, and why it matters to Canadians. We have been lied to and this lie is a whopper.

Many of us have been sounding the alarm over our sub-prime mortgages and the massive Canadian bank bailout, but since the mainstream media just keeps playing along to get along, it has gone largely unnoticed. And any economists who bring up the issue are immediately vilified.

It is now common knowledge that Wall Street created the economic crisis, and that the two main players were AIG and Goldman Sachs. But what is not as evident is the fact that these same two players came knocking on Canada's door, when the heat over what amounted to a huge insurance fraud, was threatening to bring it to an abrupt end.

In early 2005, there were warnings by many, including financial expert and Yale University professor Robert Shiller, that the housing bubble might lead to a worldwide recession, given the massive amounts of mortgage-backed securities and other risky investments, that Wall Street was now up to their necks in.

In September of 2005, The Mortgage Insurance Companies of America sent a letter to the Federal Reserve, warning about 'risky lending practices' in US real estate and by the fall the housing market boom halted abruptly, and prices began to fall nationwide.

In May of 2006, subprime lender Ameriquest announced that it would cut 3,800 jobs and closed its 229 retail branches. Merit Financial Inc, based in Kirkland, Washington, filed for bankruptcy and closed its doors, firing all but 80 of its 410 employees.

Mark Carney, Stephen Harper and Jim Flaherty all held onto the myth that no one saw this economic crisis coming, despite the fact that almost everyone did. They just didn't know what to do to stop it, because by the time the first rumblings of despair were heard, it was already too late.

With the American subprime industry drying up, Goldman Sachs needed fresh markets, and where better than Canada. They had a Republican and corporate friendly government in place, and no doubt knew of Flaherty's appetite for shady deals.

Goldman Sachs employee, Mark Carney, was the deputy finance minister who no doubt arranged all the necessary meetings, given his contact list, and he had already made a killing off Canadian taxpayers with his Income Trust fraud.

So on May 1, 2006, AIG registered as a lobbyist and the next day, Flaherty included in his first budget, a little gem. He announced that his government was opening up the market to more private insurers.

“These changes will result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home ownership,” Mr. Flaherty said. The new rules encouraged the entry of such U.S. players as American International Group (AIG) ..."

The story of how the U.S. housing crisis spread to Canada is a tale of carefully orchestrated U.S. corporate lobbying, failed public-policy promises and government inaction to numerous private and public warnings about reckless mortgage practices.

Flaherty was willing to risk $200 billion of taxpayers money to get in the game.

And we have to remember that the crash in the United States was not the accident of reckless behaviour, it was reckless behaviour engineered so as to cause the accident. That was the only way that Goldman Sachs could clean up on the insurance, bankrupting AIG.

Jim Flaherty and Stephen Harper knew that what they were doing was risky, and intentionally ignored expert advice. That's the way this game works. The sub-prime mortgages created a boom in our house prices and a handful of people got filthy rich. Or filthier richer.

They knew this was a gamble but it was one they were willing to take, because after all, the only losers would be the Canadian taxpayers and the unsuspecting pawns who bought homes they couldn't afford.

And with Canada's household debt the highest of the G-20, bankruptcies on the rise and small business defaults at a record high, we have yet to bear the brunt of this government's foolishness.

I suspect they will try to get an election over with before they have to face the music. They may even pull a Mike Harris and shorten the length of time for the campaign, which will work in their favour. We have to make sure that doesn't happen.

With a Harper majority we will have no place to go but down.

Previous:

1. It's Time to Have a Serious Conversation About Jim Flaherty and Goldman Sachs

2. Jim Flaherty, Goldman Sachs and the Foxes in the Henhouse

3. Jim Flaherty, Goldman Sachs and "The Swoop and Squat"

Jim Flaherty and Goldman Sachs on Film Part II

More to come.

Jim Flaherty, Goldman Sachs and "The Swoop and Squat"

The way that Goldman Sachs set up the American people, and eventually Canadians, was both clever and sinister. Matt Taibbi likened the scheme to the popular insurance scam known as the "swoop and squat". This is where there is a "mark" driver cut off by one perpetrator, while a second crashes into him. Then both of them collect on the insurance.

By now, most people who have followed the financial crisis know that the bailout of AIG was actually a bailout of AIG's "counterparties" — the big banks like Goldman to whom the insurance giant owed billions when it went belly up. What is less understood is that the bailout of AIG counter-parties like Goldman and Société Générale, a French bank, actually began before the collapse of AIG, before the Federal Reserve paid them so much as a dollar. Nor is it understood that these counterparties actually accelerated the wreck of AIG in what was, ironically, something very like the old insurance scam known as "Swoop and Squat," in which a target car is trapped between two perpetrator vehicles and wrecked, with the mark in the game being the target's insurance company — in this case, the government. (1)

At the height of the housing boom, Goldman Sachs was selling billions in bundled mortgage-backed securities, while also betting against those same securities. In other words they were going to have their cake and eat it too. Cashing in on one end and cashing out on the another, under a deregulation gold mine called the credit default swap.

The video below explains them better than I could, but basically what they were doing was buying insurance on your car and then hoping that you had an accident.

Goldman often "insured" some of this garbage with AIG, using a virtually unregulated form of pseudo-insurance called credit-default swaps. Thanks in large part to deregulation pushed by Bob Rubin, former chairman of Goldman, and Treasury secretary under Bill Clinton, AIG wasn't required to actually have the capital to pay off the deals. As a result, banks like Goldman bought more than $440 billion worth of this bogus insurance from AIG, a huge blind bet that the taxpayer ended up having to eat. Thus, when the housing bubble went crazy, Goldman made money coming and going. They made money selling the crap mortgages, and they made money by collecting on the bogus insurance from AIG when the crap mortgages flopped. (1)

But Goldman and others were losing patience. There just weren't enough accidents, so they needed to find a way to accelerate the demise of the unsuspecting victims of a head on crash. Enter John Paulson:

Paulson had been looking for an opportunity to bet that the housing bubble would burst. There was enough information around about the shoddy nature of many of the subprime mortgage deals—with clients who had little in the way of assets, income, or employment—that a number of close observers realized a lot of homeowners" would soon be in dire straits, unable to meet their monthly payments. In the betting parlours of Wall Street, this represented a chance to make some serious money.The best vehicle for betting against the housing market,as Paulson and a few other Wall Streeters had figured out, was to take out "insurance" on packages of mortgages that had been bundled together and sold as a stock.

.... This "insurance"—known as a credit default swap (CDS)—was simply a bet. One frustration for Paulson was that there just weren't enough of these stocks, known as collateral debt obligations (CDO), to bet against. So he decided to become proactive. He approached a number of investment banks with the request that they create more CDOs to sell to clients, so that he could then take out insurance betting these would fail. The arrangement Paulson had in mind was rife with potential conflicts of interest. He clearly wanted to help pick the mortgages that would make up the new CDOs. And he would obviously favour particularly risky subprime mortgages, thereby increasing the likelihood that the CDOs would become worthless and he would be able to collect on the "insurance" he had taken out.

Bear Stearns, the giant investment bank where Paulson had once served as managing director, said no to his scheme. But Goldman Sachs agreed to the arrangement, providing Paulson with his dream opportunity: a chance to bet on toxic CDOs worth about $5 billion. (2)

In other words, Paulson was driving one of the perp cars, while Goldman Sachs steered the other into the path of the victim vehicle, AIG. You can see it coming, can't you?

So what does this have to do with us?

Well when they were trying to create a tidy bundle of toxic paper, they came knocking on our door, and we were ripe for the picking. Jim Flaherty was now our minister of finance and his deputy minister was Goldman Sachs employee, Mark Carney.

In the first half of this year [2008], as the sub-prime mortgage crisis was exploding in the United States, a contagion of U.S.-style lending practices quietly crossed the border and infected Canada's previously prudent mortgage regime. New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time ....

The doors had been opened wide two years before, when on May 1, 2006, AIG registered as a lobbyist and:

On May 2, 2006, in his first budget, Mr. Flaherty announced that not only would Ottawa guarantee the business of U.S. insurers, it was doubling the guarantee to $200-billion.

$200 billion dollars ripe for the picking and backed by the Canadian taxpayer. And not long after, Jim Flaherty allowed derivatives (credit default swaps) to infiltrate our sound financial system, starting with our Canada Pension Plan.

... the announcement this week that the CPP Investment Board, the team that manages Canadian Pension Plan investments, has been freed from restrictions that limited its use of derivatives gives us pause. The rule that has been repealed required that the board use derivatives only for purposes of hedging risk and that it hold other assets to back any derivative investment.

Warren Buffet, whose remarkable record as an investor made him the world's second-richest man and earned him the moniker Oracle of Omaha, once described derivatives as time bombs and "financial weapons of mass destruction."

"Ticking time bombs" and "financial weapons of mass destruction".

Can you see it coming? The Canadian taxpayer driving merrily along, with Mark Carney and Goldman Sachs in the car behind, and Jim Flaherty with AIG ready to cut us off?

This is the third in a series of how Jim Flaherty and Goldman Sachs have all but destroyed our banking system. Only taxpayer funded advertising is keeping Canadians in the dark, as they are led to believe that this government has had a steady hand on the wheel.

What they don't tell you is that the hand is on the wheel of the car about to crash into us.

Stay tuned and fasten your seat belts.

Previous:

1. It's Time to Have a Serious Conversation About Jim Flaherty and Goldman Sachs

2. Jim Flaherty, Goldman Sachs and the Foxes in the Henhouse

Sources:

1. Wall Street's Bailout Hustle, By Matt Taibbi, Rolling Stone, February 17, 2010

2. The Trouble With Billionaires, By Linda McQuaig and Neil Brooks, Viking Canada, 2010, ISBN: 978-670-06419-9, Pg. 93-99

3. Special investigation: How high-risk mortgages crept north, By Jacquie McNish and Greg MacArthur, Globe and Mail, December 12, 2008

Jim Flaherty and the Goldman Sachs Capers on Film

Telling the story in three minute or so segments. When done I'll put them all on a loop.

Jim Flaherty, Goldman Sachs and the Foxes in the Henhouse

When the Conservatives won the election in 2006 and Jim Flaherty was named the minister of finance, his choice for deputy minister raised a few eyebrows. Mark Carney was a high ranking executive from Goldman Sachs who was making millions of dollars a year. Why would he accept a position that paid a fraction of what he was used to making?

But at the time our attention was drawn to the undemocratic floor crossing of David Emerson and the subsequent drama on the hill.

As a result, the media barely gave it a passing glance. But this should have made headlines, and if not then, then at least now, in light of the mess that Goldman Sachs has made of the global economy. What was their interest in Canada?

Progressive journalists and bloggers have been sounding the alarm on Jim Flaherty's sub-prime mortgage fiasco, but no one in government or the MSM are touching it. I mentioned reading Matt Taibi's two articles in the Rolling Stone on Saturday, and it really put Canada's situation into perspective. I sat up half the night with open books scattered everywhere, and came to the conclusion that this is not simply about the gamble of high-risk mortgages. This is much deeper.

This is about Wall Street taking over this country's finances and setting us on a dangerous course. And as Linda McQuaig and Neil Brooks reveal in their book: The Trouble With Billionaires, once they move in you never get them out.

... by the early 1990s, prodigies of Wall Street had effectively taken over government by being appointed to its top economic management positions. A virtual revolving door now connects the power corridors of Wall Street and Washington, with Goldman Sachs practically serving as a training school for those running the U.S. Treasury. Robert Rubin spent twenty-six years at Goldman Sachs, rising to co-chairman of the firm before becoming Treasury secretary under Bill Clinton; Henry Paulson, a one-time Goldman CEO, became George W. Bush's Treasury Secretary. (1)

And the result has been massive deregulation, allowing Wall Street to become the Las Vegas strip. And any attempt to reverse this has proven to be impossible.

This extraordinary political clout has enabled the wealthy few to effectively disable government when it comes to regulating financial markets. So when Brooksley Born, head of the U.S. Commodity Futures Trading Commission, tried in the late 1990s to bring greater oversight to the wildly gyrating derivatives market, she was stopped in her tracks. It was almost a foregone conclusion that her efforts would be defeated, since she was opposed by the three most powerful government officials in the financial domain: Treasury Secretary Robert E. Rubin, Securities and Exchange Commission Chairman Arthur Levitt Jr., and Federal Reserve Chairman Alan Greenspan. Significantly, these men had all earned their wealth via Wall Street and all were dedicated to the Wall Street creed of deregulation. (1)

Jim Flaherty and Stephen Harper appear to have a very unhealthy infatuation with banks. I wonder if as part of role playing, they make their wives dress up as banks or bankers. But then I try not to wonder about things like that and turn my attention to pleasanter thoughts. Like a multi-car pile up.

But you can't escape this "good banks" phenomenon. It's everywhere. Canadian banks didn't fail because they were sound and regulated. But turns out this was only smoke and mirrors, because what Mark Carney has been doing, is deregulating Canada's financial sector.

We know that this new security perimeter deal is only for the benefit of multinational corporations, as globalization seeks to create a flat earth, with nothing in it's path. But Canada was a stumbling block because we had one of the safest banking systems in the world.

That's about to change. With a Wall Street guru now head of the Bank of Canada, our safeguards are being incrementally removed, that were once a barrier to foreign interests getting rich off the Canadian taxpayer.

Mark Carney started with taxing income trusts, that destroyed the life savings of many Canadian seniors, but netted $35 billion for Goldman Sachs' clients. He also removed the 15% tax on foreign investors, clearing the way for more takeover of Canadian assets. (2) In the 2010 budget, more tariffs were removed, costing taxpayers another $300 million a year, that will have to be absorbed by the working class.

The tariff elimination was by far the biggest move for corporate Canada ... [and] Despite the fiscal crunch, in which more than $160-billion will be added to the national debt by mid-decade, the federal government committed to follow through on cuts to corporate tax rates, to 15% by 2012. It would also establish a panel of MPs and businesspeople to look at repealing layers of red tape that might be adding unnecessary costs for companies. (3)

Translation for "repealing layers of red tape" - the removal of environmental protections.

Welcome to Wall Street.

The taxpayer funded ads about our economy are only creating a facade. Because behind the scenes, the boys are busy creating the perfect storm. A deregulated banking industry and an enormous amount of high-risk mortgages, now owned by us.

None of this was by accident, nor was it just a fleeting and dangerous whim. And I can prove it.

This is one in a series of articles on Jim Flaherty, his relationship with Goldman Sachs and why it might be too late to change the course they have put us on.

Sources:

1. The Trouble With Billionaires, By Linda McQuaig and Neil Brooks, Viking Canada, 2010, ISBN: 978-670-06419-9, Pg. 65-66

2. Ottawa moves to eliminate tariffs, By Paul Vieira , Financial Post, March 4, 2010

3. Taxes and Avoiding Them on Everyone's Tongue, Toronto Sun, November 11, 2007

It's Time to Have a Serious Conversation About Jim Flaherty and Goldman Sachs

Maude Barlow, with the Council of Canadians, once said that Chantel Hebert was the only progressive voice on Canadian television. The last thing I ever heard Hebert say was that she felt that Jim Flaherty was the most underrated politician on Parliament Hill.

I have never listened to another word from her and avoid her columns. If she told me the earth was round, I would have to rethink my position. But was her remark the result of lazy journalism, or was she, like most Canadians, simply brainwashed by the millions and millions of dollars in taxpayer funded advertising?

Who knows, but she was dead wrong. Next to Stephen Harper, Flaherty is the most overrated politician in the country. But with our money he has created a corporate branding. In the same way that we think of Nike as the company promoting fitness and athletic prowess, or Allstate as the all knowing father who keeps us safe in their hands, the Conservatives have successfully branded themselves as good fiscal managers, even when the facts show the opposite to be true.

But so long as we don't have to see the sweatshops where Nike shoes are made, or the people left high and dry by Allstate, we will continue to buy into the illusions.

Journalist and author Matt Taibbi has two excellent pieces in Rolling Stone magazine, one a year old and the other written just this week: Wall Street's Bailout Hustle and Why Isn't Wall Street in Jail?

I read them both last night and was astounded at how similar the stories are to what is taking place in Canada. In fact, many of the names are directly linked to our current government, the most prominent being Goldman Sachs.

So why is no one in the mainstream media doing an in depth piece on Jim Flaherty? Some have started writing about the sub-prime mortgage mess he's created, and the fact that he "secretly" bailed out our banks to the tune of $125 billion, but what he has actually done with Canadian finances could be a six-part miniseries, in the horror genre.

It's absolutely frightening.

Goldman Sachs

"Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy — they're re-creating the conditions for another crash" - Matt Taibbi (1)

In his piece Why Isn't Wall Street in Jail, Taibbi is incredulous that despite the so-called economic crisis being the result of unlawful and unethical behaviour, no one went to jail. Except of course Bernie Madoff, whose Ponzi scheme wasn't even really part of the the Wall Street highway robbery.

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

But what the folks on Wall Street did was rob from ordinary citizens, and yet no one went to jail. Apparently theft is legal if you really didn't need the money you stole. Madoff is now going public, claiming that the banks and hedge fund managers were in on his scheme, because they could have blown the whistle, but were making far too much money to risk losing a good thing.

And while all of the major U.S. banks were guilty of fraud, Goldman Sachs' activity was unique, because: "Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling."

I've written of this before so won't go into again, but I do want to draw attention to Jim Flaherty's unique relationship with GS and why this matters to Canadians.

Goldman Sachs and the Theft of Seniors Hard Earned Assets

By now, many of us are aware of the treachery of Stephen Harper and his promise not to tax income trusts. But what went on behind the scenes of this fiasco would probably make Bernie Madoff blush.

It started with the hiring of Mark Carney as a financial advisor. Carney, while a brilliant financier, was a long-time Goldman Sachs employee, who knew how to play the game.

Carney managed to convince Canada's finance department to close a tax loophole that allowed huge companies to boost their profits by converting themselves into tax-free income trusts — a practice that he claimed was "draining billions from government coffers". (2) He had first pitched the idea to Paul Martin, but a brilliant financier himself, Martin rejected the notion.

But Carney managed to persuade Conservative finance minister Jim Flaherty of its merits, and when the Tories made their surprise reversal in 2006, senior citizens, a core Tory constituency, were furious about the hit on their portfolios. (2)

The story was sold to Canadians as saving us money, and that the only victims were rich corporations. But the opposite was true. Rich corporations cashed in on the scheme to the tune of 35 billion dollars and the only victims were ordinary citizens, mostly seniors, many of whom lost everything.

What Carney did was rather clever. He found a way to exempt Goldman Sachs from the tax, and make a fortune off the unsuspecting Canadian taxpayer. Because when income trusts took a hit on the market, GS bought them up at the deflated prices. Carney then wrote the tax in such a way that 'private' investors would be exempt from the new rules, so GS simply made their new acquisitions 'private'. All others are subject to a 31.5% tax. (2)

And what about those savings we were supposed to enjoy? More smoke and mirrors. It has cost the Canadian taxpayer $1.2 billion in potential revenue, to solve an alleged tax leakage problem of $500 million. (3) Carney was rewarded with an appointment to the Bank of Canada, and Flaherty is constantly being rewarded with quotes from Carney that help to keep up the facade of him being a good financial manager.

He was a personal injuries lawyer for gawd sake, who almost bankrupted Ontario.

Meanwhile, those Canadian seniors are still without their hard earned assets. Only the already extremely wealthy, mostly Americans, saw any benefit.

And as we listen to the Conservatives blather about being tough on crime, as Matt Taibbi says:

Criminal justice, as it pertains to the Goldmans of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats.

What other decisions of Flaherty's came from Goldman Sachs, via their Canadian representative? How many others have struck it rich off the backs of the Canadian taxpayer?

Stick around, because this is only the first in a series about Jim Flaherty. The story that the Canadian media is afraid to speak of, preferring to become aiders and abettors in our victimization.

And to Chantel Hebert and others who believe that Jim Flaherty is underrated, do your homework. You're going to look awful stupid when the you know what hits the fan. And it will.

Sources:

1. Wall Street's Bailout Hustle, By Matt Taibbi, Rolling Stone, February 17, 2010

2. Canada’s Merchant Banker: Is the recession really over? A profile of Bank of Canada governor Mark Carney, By John Lorinc, Walrus Magazine, Jul/Aug 2009

3. Mark Carney exempted Goldman Sachs from Flaherty’s income trust tax, CANADIAN ASSOCIATION OF INCOME TRUST INVESTORS, May 11, 2010

4. Still More Goldman Sachs Tentacles, Wall Street Selector, February 13, 2011

5. Why Isn't Wall Street in Jail? By: Matt Taibbi, Rolling Stone, February 16, 2011